ORLANDO, Fla.-Veteran credit union executive John Tippets took a credit union that some said was "toast" and made it the toast of the town, and at CU Journal's Grow Show, Tippets will outline exactly how he did it.

Tippets retired from American Airlines CU in Texas in 2008, only to have NCUA come calling after San Diego-based North Island Financial CU lost a staggering $102.4 million combined in 2008-09. What happened next-a startling turnaround in a hypercompetitive banking market in the midst of the worst economic downturn in decades-is a lesson in more than just crisis management.

Tippets and the executive team implemented numerous cost controls that dramatically cut expenses. With gradual improvement from the California economy came a reduction in allowance for loan losses. But it wasn't just cost-cutting and improvement in the local economy that tell the whole story.

North Island's net income for 2010 was $11.4 million. In 2011 it had net income of $17.8 million, followed by $14.6 million in 2012. North Island's net worth ratio for 2012 was 8.45% ("well capitalized"), up from 7.33% ("well capitalized") in 2011, 5.25% ("undercapitalized") in 2010 and 3.39% in 2009 ("significantly undercapitalized"). Its allowance for loan losses also improved dramatically: ALL was just $4.8 million in 2012, compared to $29.2 million in 2011, $41.9 million in 2010, $62.4 million in 2009 and $40.8 million in 2008.

For Tippets his tenure is best described by several "v" words, but none are "victory." "Over two-and-a-half, three years things really turned around nicely," he assessed. "We reached what I call vitality. We were viable. Capital got to be adequate, expenses got under control and the reshaped management team was doing well."

Viable is "good," he continued, but "not good enough" in the long run. According to Tippets the challenge for North Island, or any credit union, is to get to "vigorous." "The Grow Show will be all about healthy growth," he said. "So I look at myself as the alley-oop pass that starts it off. After I am done talking about recovering, then people will start talking about growing."


Lessons Learned

Tippets said the biggest lessons learned from North Island's rebound from the abyss are perseverance and persistence. "Nothing happens as a miracle, and there is no such thing as an overnight turnaround," he said. "It was a long, tedious process. It was not any one thing it was a whole bunch of things, led by an application of good principles."

Tippets insisted he did not pull off the turnaround on his own, stating there were "building blocks" when he arrived, including "good, talented people that formed the team."



Session: From Toast to Turnaround

Speaker: John Tippets

Focus: Learn how this CEO helped turn around a credit union that once was described as 'toast.'

What: CU Journal Grow Show

Where: Ritz Carlton, Orlando

When: May 29-31

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